Air Travel May Cost More If Crude Oil Prices Rise

Air travellers may have to pay more for their travel as airlines grapple with higher ATF prices. With prices of crude oil firming up, an ATF price rise is inevitable. A 20 per cent rise in crude oil prices from the current $65-70 per barrel could bring down operating margins to 4-6 per cent. Airlines may have to pass on the increased fuel cost to consumers, which could affect demand, according to a report by CARE Ratings.

The report says that the combined passenger traffic is expected to double in the next five years with a growth rate of 14-15 per cent annually. It adds that the ratio of domestic vis-à-vis international passengers is expected to narrow further as airlines offer tickets priced at par with train tickets between select destinations. Two new major airports at Navi Mumbai (Mumbai region) and Noida (NCR) are expected to add sizeable capacity. Read More…